Dynamics of financial markets in the context of globalization

The transformation of national segmented financial markets into integrated parts of the global financial market- the globalization process - involves cross-border and cross-sector integration in which capital movements and financial services are key determinants. Growth in trade and investments, important changes in production and technology, meaningful innovations in telecommunications and computer applications, and a generalized trend towards liberalization and deregulation of domestic and international markets have led during the last two decades to a closer and deeper interaction among international markets. As a result, the structure of financial markets has changed significantly and new international business opportunities, operations, networks, and challenges have appeared. Financial systems from both developed and developing countries have been subject to change. A key component of recent changes in the financial sector from the developing countries has been the impressive growth and internalization of capital markets. These markets have acquired great importance for the mobilization of international resources to support the continuing and expanding needs of those countries eager to finance their economic activities. The corporate sector plays an important role, since it is in the practice that large corporations have the widest range of funding options. They can engage in arbitrage between less efficient and more efficient markets on a global scale. In this paper we try to highlight the most important transformations that have occurred in the developing countries, with the reforms that have built a more sound and efficient financial system and to try to quantify the impact of globalization upon this system.